Letter of Good Standing

The aim of the COIDA is to provide for Compensation in the case of disablement caused by occupational injuries or diseases, sustained or contracted by employees in the course of their employment, or death resulting from such injuries or disease; and to provide for matters connected therewith. The COIDA basically prevents employees covered by the Act from suing their employers for damages in terms of common law.

This letter verifies that your company actually exists, has paid all its statutory dues to COID, met all its filing requirements and, therefore, is authorised to transact business.

COID Act requires compensation insurance

The Compensation for Occupational Injuries and Diseases (COID) Act section 89 provides that when a mandatory hires a contractor, the contractor has to register as an employer and pay the relevant assessments.

If the contractor fails in this duty, these workers are deemed employers of the mandatory, who then has to pay the assessments for them, which he may recover from the contractor.

However, the Labour Department may recover compensation from the contractor instead, and make up any shortfall by recovery from the other. A mandatory is not liable in this regard for an incident on another site.

Letter of good standing falsified

There are allegations of fraudulent and falsified compensation letters of good standing. Some employers ask contractors for proof of payment to the Compensation Fund, check the dates, and verify payments with the Labour Department.

The COID Act allows subcontractors to claim under the main contract, should they not be registered or if their registration is lapsed. However, if you claim, they will load your premium if you claim over a certain amount.

“In the transport industry, we had a number of lost time injuries and a fatality in one year, and our repayments went sky high. By managing our safety system and reducing injuries, we brought the premium back down,”.

Some employers get a temporary letter of good standing, valid for a month, renewable every month until you receive the letter of good standing.

Here are the seven things a legitimate Letter of Good Standing will include

To protect yourself against Letter of Good Standing fraud, check your letter contains:

  • The Department of Labour logo
  • A barcode with your certificate number
  • The date of issue
  • An expiry date
  • A watermarked South African Coat of Arms
  • A signature from the Compensation Commissioner
  • And Compensation Fund logo

For more information visit:  http://www.labour.gov.za/DOL/services/ or http://www.labour.gov.za/DOL/legislation/acts/basic-guides/basic-guide-to-compensation-fund-assessment-fees